The Revenue filed an appeal to the High Court against the order passed by the Tribunal on the issue of deletion of disallowance u/s. 14A on the ground that the same was against the CBDT’s Circular No. 5/2014. The Revenue argued that the case would fall within the exceptions provided in clause 10(b) of the Circular No. 17/2019 on low tax effect. The High Court held that the instant case did not fall within the said exception since the Tribunal has nowhere declared the Circular No. 5/2014 as illegal or ultra vires and hence dismissed the appeal since the tax effect was much less than the prescribed limit. (AY. 2015-16)
PCIT v. Hyrcon Electronics (2022) 209 DTR 61 / 324 CTR 614 (HP) (HC)
S. 268A : Appeal – Application – Reference – Instructions -CBDT Circular – Low tax effect – Tribunal dismissed the appeal on disallowance u/s. 14A. Since the Tribunal recorded findings only on the interpretation of the contents of the Circular No. 5/2014 dealing with disallowance u/s. 14A, the said findings cannot be regarded as the Tribunal declaring the CBDT Circular No. 5/2014 either as illegal or ultra vires.[ S. 253, 260A ]